10/10/2011 @ 1:50PM

Big Real Estate Loss Said To Be Looming For Lloyds

Lloyds Banking Group is about to take a 35% loss on a billion-pound portfolio of commercial property debt, the Financial Times is reporting.

The bank is entering second-round talks with four bidders to sell the portfolio, the FT said. What was initially a set of bids by dozens of parties has been narrowed to four, each of which has initial bids of 650 million pounds, the newspaper reports.

A sale could take place before Christmas, it said.

Lloyds shares are trading up 2.3% Monday. UK-based rival
Barclays
is trading up 5.2% Monday, while
HSBC
(HBC) trades up about 2%.

The news comes as French President Nicolas Sarkozy and German Chancellor Angela Merkel expressed support for the euro, and said they would support recapitalizing Europe’s banks. The countries have said they will agree on a set of measures to shore up the Eurozone economy in the face of debt default threats by the end of October.

Germany’s
Deutsche Bank
(DB) is trading up 2.6% Monday.

Spain’s Banco Santander is trading up about 1%, while BBVA () trades up about 2.1%.